Investors fear the Netflix flywheel is broken, warns Lightshed’s Rich Greenfield

Summary

Rich Greenfield of Lightshed Partners argues that extreme bearishness toward Netflix after Q2 earnings is overdone. He believes the market sees NFLX as ex-growth, but points to still-strong revenue growth, margin expansion, an early-stage advertising business doubling yearly, an improving competitive landscape, and heavy buybacks. He views the sell-off as a buying opportunity although the stock will need time to prove itself.

• Netflix stock is down sharply post-Q2 as investors fear it has gone ex-growth with engagement growth of only 2% YoY.
• Greenfield calls the sentiment "peak bearishness" and argues the market is ignoring 12% revenue growth, margin expansion, and buybacks.
• The advertising business is doubling year over year to $3B but is still tiny relative to time spent, with significant runway for multiple expansion.
• New shorter-form and daytime content is seeing incremental viewing, which could boost engagement over the next 12 months.
• Competitive dynamics are easing: Hulu is being sunset by Disney, and HBO is expected to be merged into Paramount Plus.
• NFLX has become a show-me stock after losing investor confidence; it will take time to prove earnings growth can reach high teens toward 20%.
• Greenfield says this is the kind of capitulation where you buy, but it requires patience.